24 Months Until the Largest Tax Hikes in History

Obama called the deal "real money that's going to make a real difference in people's lives."

As opposed to the phony money created by the failed "stimulus". Thank you Mr. President, you finally got something right.

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The extended tax cuts include lower rates for the rich, the middle class and the working poor, a $1,000-per-child tax credit, tax breaks for college students and lower taxes on capital gains and dividends.

Of course this is incorrect. Marginal tax rates on January 1 will be the same as today. Same for capital gains and the child tax credit. There are no "lower rates" except for a 2% reduction in SS tax borne by employees subject to it.

In a reversal of his earlier stance opposing the legislation, Little Timmy Geithner reappears to comment:

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"This legislation is good for growth, good for jobs, good for working and middle class families, and good for businesses looking to invest and expand their work force," said the little Treasury Secretary.

Of course this is incorrect. Marginal tax rates on January 1 will be the same as today.

Of course you're right. Let me help you out here:

To a Democrat, not raising taxes is the same as cutting taxes. See also: Cutting the rate of increases in spending is the same as reducing spending; and...cutting taxes is the same as giving someone money.

Simple solution, but one which no mainstream politician (except the Ron Paul/libertarian contingent) dares to even discuss: Dump the black hole/millstone/noose that is strangling the nation, the Federal Reserve. The annual interest paid by the US treasury to the "Fed" is approximately that which is raised in personal income taxes. In the periods where the US has resisted a Federal Reserve style central bank, the people have prospered to a greater extent than periods in which a central bank has had the power to regulate the economy. The Fed is so far above and beyond the law that they are not even subject to an audit... the perfect recipe for crime and corruption beyond one's wildest imaginings.

"We've never made the case, or argued the case that somehow Osama bin Laden was directly involved in 9/11. That evidence has never been forthcoming". VP Cheney, 3/29/2006. Interview by Tony Snow

Simple solution, but one which no mainstream politician (except the Ron Paul/libertarian contingent) dares to even discuss: Dump the black hole/millstone/noose that is strangling the nation, the Federal Reserve. The annual interest paid by the US treasury to the "Fed" is approximately that which is raised in personal income taxes. In the periods where the US has resisted a Federal Reserve style central bank, the people have prospered to a greater extent than periods in which a central bank has had the power to regulate the economy. The Fed is so far above and beyond the law that they are not even subject to an audit... the perfect recipe for crime and corruption beyond one's wildest imaginings.

Yep. Pretty much. Since the creation of the Fed, the US dollar's value has dropped about 95%. This is basically stealth taxation and theft from the common man.

Spin nothing. A Republican congress put a Republican bill in front of a Republican president with a fucking sunset clause in it. This has NOTHING to do with Obama.

Sure it does. Obama is President now. The people currently in power are the only ones empowered to take action right now and that does not include George W. Bush. I get that it's fashionable right now to deflect blame for anything bad that happens to Bush and give credit for anything good that happens to Obama but if they had let the tax rates increase that would have had everything to do with Obama.

Yep. Pretty much. Since the creation of the Fed, the US dollar's value has dropped about 95%. This is basically stealth taxation and theft from the common man.

Precisely the reason Congress will get all the money it wants anyway, tax increase or no tax increase.

The government could theoretically do whatever it wants without any tax revenue at all... for a while. Just print money. Obviously this can't last very long, since the purchasing power of one's labour would diminish as rapidly as money is being printed to finance whatever the government needs to finance.

It's an absurd illustration of what's happened since creation of the Fed, but the only difference between this and reality is the passage of time. What would happen extremely rapidly (with no tax revenue) has simply taken a hundred years to transpire. Bear in mind the Fed has been creating dollars at an unprecedented rate recently. The illusion of the Federal Reserve's ability to guarantee a stable and secure monetary system, if there ever was one, is dissipating.

The Fed must be dismantled. We created it, and we can eliminate it. It took decades for its inherent faults to become evident, and it won't be dismantled overnight. We can start though. This is radical surgery that will take some time. Until we do, it will devour our society as certainty as cancer, left untreated, will devour a man.

In the meantime, Congress must dramatically reduce its out of control spending habit - the kind that was evident in the 111th's failed 2010 omnibus budget proposal. Doing so will not excise the cancer, but it will delay the US's eventual collapse - perhaps long enough to complete the surgery.

[QUOTE=john galt;1770466]Obama called the deal "real money that's going to make a real difference in people's lives."

As opposed to the phony money created by the failed "stimulus". Thank you Mr. President, you finally got something right.

Of course this is incorrect. Marginal tax rates on January 1 will be the same as today. Same for capital gains and the child tax credit. There are no "lower rates" except for a 2% reduction in SS tax borne by employees subject to it.

In a reversal of his earlier stance opposing the legislation, Little Timmy Geithner reappears to comment:Why do people constantly bitch about what the Democrats achieve nothing is perfect for you. A lot can happen in 2 years maybe we will die who knows except GOD. So take it one step at a time and we will see what happens in 2012.At least both sides compromised this time and the people who are on unemployment will not have to worry when will their next dollar come from. Life is to short which is true.

The Fed must be dismantled. We created it, and we can eliminate it. It took decades for its inherent faults to become evident, and it won't be dismantled overnight. We can start though. This is radical surgery that will take some time. Until we do, it will devour our society as certainty as cancer, left untreated, will devour a man.

And this wouldn't have happened had that Republican congress and Republican president not set the stage for a 2010 idiotic showdown.

This was explained. Either you missed it or are choosing to ignore it. Reconciliation had to be used to pass the tax cuts because Democrats wouldn't vote for them and Republicans didn't have 60 votes. It would take 60 votes to make them permanent.

So who to blame for not giving 60 votes. Democrats.
Reconciliation has the Byrd rule which limits bills passed with it to ten years.
So who to blame for that rule and what party did he belong to? Byrd, a Democrat.
Who had four years of Congressional control and two years of Congressional control and the presidency in which to deal with this? Democrats.
Who choose to hold it off until this lame duck session? Democrats.
Who even now is STILL voting against it? Democrats.

That said. Obama is the president and has been for two years.

Those are OBAMA's wars now. His campaign promised timelines for closing Guantanimo and for pulling out of Iraq have passed. Its been 25 months since he took office. He doubled down on Afghanistan.
The Patriot Act, FISA and TSA. They are Obama's laws and agencies carrying those actions out now. He and his Congress didn't repeal or modify them. Instead Grandma is being molested to keep America safe!
PAYGO was promised in 2006 by Democrats. Instead we went from $250 billion a year deficits which they promised to eliminate, to $400 billion a year deficits while Bush was in office. Under Obama they have trillion dollar a year deficits.

Obama ran under the mantra of change. He's been more of the same and doubled down on what was wrong.

Simple solution, but one which no mainstream politician (except the Ron Paul/libertarian contingent) dares to even discuss: Dump the black hole/millstone/noose that is strangling the nation, the Federal Reserve.

Rep. Ron Paul, the Texas Republican who has passionately called for dismantling the Federal Reserve, will be running the panel that oversees the central bank when Republicans take the House majority next year.

This will certainly be an interesting one. Long range this is probably a good idea. In fact I'd argue for the elimination of all deductions but with a corresponding lowering of tax rates. This won't happen of course. But what's especially pleasing is to see this article lay bare the impact that government intervention has in the market economy:

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It has also been a boon to home builders, construction workers, the financial services industry and local governments that benefited from fatter real estate tax revenue.

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In part, the hoary deduction has a target on its back as a result of policymakers rethinking the whole issue of homeownership. In the wake of the havoc that followed the latest housing bust a calamity that still shadows the U.S. economy and will for years to come it's no longer so clear that near-universal homeownership should be a paramount goal.

Scholars have long argued that the mortgage deduction and other tax subsidies supporting housing, including a deduction for property taxes and tax exemptions for profits on home sales, are neither equitable nor economically efficient. Some say they've helped skew the economy's reliance on an industry that has little export potential and often encourages over-consumption.

Here's a great quote:

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"It's fair to ask whether [government money] is best spent on housing or plants and equipment or other investments," said Richard K. Green, director of the USC Lusk Center for Real Estate.

Isn't interesting (and telling) how the money not received by the government as a result of a tax reducing deduction is referred to as "government money" that is being "spent on housing?" It's not really government money of course. It's the money of the people who've earned it. But this very mindset infects our political/governmental realm today and reveals the rather frightening way that many people think. Your money is the government's money...when they "allow" you to keep it, that it considered spending (from them to you). This is called slavery.

This will certainly be an interesting one. Long range this is probably a good idea. In fact I'd argue for the elimination of all deductions but with a corresponding lowering of tax rates. This won't happen of course. But what's especially pleasing is to see this article lay bare the impact that government intervention has in the market economy:

Here's a great quote:

Isn't interesting (and telling) how the money not received by the government as a result of a tax reducing deduction is referred to as "government money" that is being "spent on housing?" It's not really government money of course. It's the money of the people who've earned it. But this very mindset infects our political/governmental realm today and reveals the rather frightening way that many people think. Your money is the government's money...when they "allow" you to keep it, that it considered spending (from them to you). This is called slavery.

This absolutely should be addressed. There is a real problem though and that reality that as noted, eliminating it needs to occur with a lowering of tax rates which likely won't occur because all the various levels of government are already broke.

The other point will be to see who the increases get passed on to with regard to the tax increases. Like most naive leftists, the folks who propose it will try to claim they are hurting the rich and of course helping the poor because the rich would never take any action to protect their interests and have no financial knowledge or concerns, hence why they are rich. (Yes that is sarcasm)

If the deductions were eliminated, I can imagine most rents going up between $75-200 per unit.

The deeper question should be though, why tax income? Earning income is an activity we all desire so why discourage it? We really need to investigate mechanisms that stop hurting positive activity within our own economy.

We need to give up on free trade. You want to do business with the largest economy in the world, and you are outside of it, then pay that toll. Tariffs would stop against currency manipulation. It would stop the benefits from shipping jobs overseas. If you look at our tax structure, the taxes we now often pay internally used to be paid externally. That should change.

... In fact I'd argue for the elimination of all deductions but with a corresponding lowering of tax rates.

Be careful what you wish for. You may recall the Reagan era income tax cuts / simplification included the elimination of many favorite tax deductions - among them state sales taxes, credit card interest, bank and student loan interest etc. At the time these were derided as "tax breaks for the rich" like doctors and lawyers carrying $100,000 in student loans, who now bought big houses and bigger boats with their postgraduate income. Certainly they could afford to give up those tax breaks

Many people burdened with high credit card interest rates today would love to deduct them from their incomes. Used to be, but no more.

I believe the present mortgage deduction limitation also began at that time (there are limits on the deductible amount and it's gradually reduced above an income threshold anyway). We could eliminate all deductions as you state, but the return of confiscatory income taxes would be the inevitable result.

Tracking and reporting and taxing personal income is a hideous mess, and is used by psychopaths in government as a tool for social engineering and class warfare, no matter what their party affiliation. The fact that deductions and exemptions exist is a symptom of an inherently flawed concept, similar to the hundreds of exemptions already granted to companies seeking relief from the requirements of Obamacare. It's divisive, counterproductive, intrusive, and generally evil. The only way I could advocate elimination of the mortgage interest deduction is to decouple personal income taxes from personal income. Permanently.

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Isn't interesting (and telling) how the money not received by the government as a result of a tax reducing deduction is referred to as "government money" that is being "spent on housing?" It's not really government money of course. It's the money of the people who've earned it. But this very mindset infects our political/governmental realm today and reveals the rather frightening way that many people think. Your money is the government's money...when they "allow" you to keep it, that it considered spending (from them to you). This is called slavery.

The deeper question should be though, why tax income? Earning income is an activity we all desire so why discourage it? We really need to investigate mechanisms that stop hurting positive activity within our own economy.
...
We need to give up on free trade. You want to do business with the largest economy in the world, and you are outside of it, then pay that toll. Tariffs would stop against currency manipulation. It would stop the benefits from shipping jobs overseas. If you look at our tax structure, the taxes we now often pay internally used to be paid externally. That should change.

This absolutely should be addressed. There is a real problem though and that reality that as noted, eliminating it needs to occur with a lowering of tax rates which likely won't occur because all the various levels of government are already broke.

Agreed. This will be a back tax tax hike and it will be fully endorsed by Obama and the Democrats making it yet another broken promise. But politics aside and my general preference for lower taxes this might still be an overall move in the right direction.

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Originally Posted by trumptman

The other point will be to see who the increases get passed on to with regard to the tax increases. Like most naive leftists, the folks who propose it will try to claim they are hurting the rich and of course helping the poor because the rich would never take any action to protect their interests and have no financial knowledge or concerns, hence why they are rich. (Yes that is sarcasm)

If the deductions were eliminated, I can imagine most rents going up between $75-200 per unit.

You certainly correct. The tax increases always trickle down. This is the left/liberal/Democrat/progressive form of "trickle down" economics...only it is trickle down poverty.

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Originally Posted by trumptman

The deeper question should be though, why tax income? Earning income is an activity we all desire so why discourage it? We really need to investigate mechanisms that stop hurting positive activity within our own economy.

Absolutely! Taxing income is probably the worst thing the tax code currently does. But is does have the benefit of treating everyone like slaves, invading their privacy and pitting different income groups against one another. So there's that.

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Originally Posted by trumptman

We need to give up on free trade. You want to do business with the largest economy in the world, and you are outside of it, then pay that toll. Tariffs would stop against currency manipulation. It would stop the benefits from shipping jobs overseas. If you look at our tax structure, the taxes we now often pay internally used to be paid externally. That should change.

Here we disagree. Free trade is a tremendous benefit to this country (and any other country that engages in it.) The currency games are a red herring.

It has become conventional wisdom in reporting on the economy that rising imports and a growing trade deficit are bad signs for growth. As recent headlines warn us, "Economic growth slowed by trade gap" (Washington Post) and "Wider Trade Gap Signals Weak Growth" (Wall Street Journal).

Such reporting flows unavoidably from Keynesian logic. If we import a million shoes to satisfy domestic demand, that's a million shoes we no longer need to make ourselves. When demand "leaks" abroad, the economy grows more slowly and it creates fewer jobs.

Or so we are told.

Those journalists and the experts they quote who tout this theory should get their heads out of the theoretical clouds and look at what really goes on in the economy. All the evidence points to the fact that rising imports and a growing trade gap, far from being drags on growth, are among the surest signs that the economy is expanding.

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In the long run, imports spur growth by forcing domestic producers to be more efficient and productive. Like competition generally, imports weed out the less-productive domestic producers, leaving the market to more-competitive U.S. companies. Those companies are better able to expand their share in global markets and create sustainable jobs with higher pay.

Obsession with the trade deficit also ignores the fact that the dollars we spend on imports quickly return to the United States. If they are not used to buy our goods and services, they are spent on assets, such as real estate, stocks and Treasury bonds. This inflow of capital also helps to fuel growth by keeping interest rates down and providing capital to build factories and expand output.

During the past few decades, a truly global division of labor has emerged, presenting opportunities for specialization, collaboration, and exchange on scales once unimaginable. The confluence of falling trade and investment barriers, revolutions in communications and transportation, the opening of China to the West, the collapse of communism, and the disintegration of Cold War political barriers has spawned a highly integrated global economy with vast potential to produce greater wealth and higher living standards.

Among the less sensible heads are 130 members of Congress who wrote to Geithner last month demanding tough action against China. They argued that Beijing has artificially depressed the value of its currency to promote its goods in other markets and discourage exports to China.

One of the chief authors of the letter, Rep. Michael Michaud (D-Maine), charges in a press release that "China's currency manipulation . . . presents an insurmountable trade barrier to U.S. manufacturers" trying to export to China. The text of the letter claims that "U.S. exports to [China] cannot compete with the low-priced Chinese equivalents."

"Insurmountable?" "Cannot compete?" Nonsense. Regardless of its currency regime, China has been the hottest major export market for U.S. companies in the last decade.

Since China began to gradually appreciate its currency in 2005, U.S. exports to the Asian giant have shot up by 69%, according to the U.S. Commerce Department. That compares to a much more sluggish 19% increase in exports to the rest of the world.

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U.S. farmers have enjoyed great success in China's market. Since 2005, U.S. agricultural exports to China have more than doubled, from $5.7 billion to $13.8 billion. Farm exports to China have been growing three times faster than farm exports to other countries. China now buys more than half of U.S. soybean exports.

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China's demand for U.S. exports was just as hot before it appreciated its currency beginning in 2005. From 2001 to 2005, when the Chinese currency was even more undervalued than it is today, U.S. exports to China more than doubled. The share of U.S. exports going to China has been rising steadily, from 2.7% in 2001 to 6.6% in 2009.

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The real motivation behind complaints about the Chinese currency regime is not to promote exports but to blunt imports. What really galls critics is the rapid rise of Chinese imports to the United States. Imposing tariffs on those imports would benefit a small slice of U.S. industry, but at great expense to tens of millions of American families.

A blanket tariff on imports from China would act as a regressive tax on shoes and clothing, biting into the budgets of American families that can least afford it.It would also make products created in the U.S. but assembled in China, such as iPhones, laptop computers and other consumer electronics, more expensive and less widely affordable.